Iron ore price rise could force China steel rationalization

[…]higher costs might actually help rationalize the Chinese steel industry by pricing some smaller firms with obsolete technology out of business.

After Brazilian mining conglomerate Vale hammered out 2008 benchmark prices for iron ore fines with Japanese and Republic of Korea (ROK) steel makers last week, Baosteel Group, China’s largest steel maker, agreed on the price for fiscal 2008, accepting the Brazilian miner’s price hikes that ranged from 65 percent to 71 percent compared with 2007.

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China’s steel needs have soared, driven by rapid urbanization and many large infrastructure projects. China imports almost half of the world’s seaborne iron ore, making it the largest iron ore consumer in the world.